What Is Financial Awareness Counseling For Federal Student Loans?

Consider doing financial awareness counseling after you took out a federal student loan

Flickr user Federico Feroldi

Financial Awareness Counseling is online interactive tool. Provided by the federal government, the tool helps students understand their loans and their commitment as borrowers.  

All students and families who have federal student loans can access this tool by logging into their account on the Federal Student Aid site and clicking the Financial Awareness Counseling link.

What to Expect From Financial Awareness Counseling

It takes about 20 – 30 minutes to complete the entire counseling module. You must complete the whole module in a single session.

On completion of the session, you will have a better idea of how much you currently have in federal student loans, and how much your student loan debt is likely to be by the time you graduate. Keep in mind that these are estimated figures. The exact figure may vary depending on whether you prepay, and several other factors.   

The module breaks down into five categories:

1. Understanding your loans

In this section, you will be able to see your current federal student loan debt. This information is obtained from the National Student Loan Data System. If you have loans that are not reflected within this system, you can add those loan amounts to get a better picture of your total student debt.

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2. Managing your budget

This section lets you compare your income with your living expenses. You can download this information as an Excel spreadsheet so you can make adjustments where possible.

3. Repayment plans

A budgeting tool in this section allows you to compare your estimated income against your living expenses after graduation. You can use this tool to calculate how much your monthly payments will be with each of the basic repayment plans and explore different repayment scenarios. It also calculates how much you are likely to pay in total interest, as well as your overall debt when you increase or decrease your monthly payments by x amount.

4. Avoiding default

You may have every intention of staying on top of your monthly payments but life gets in the way. You may find yourself on the brink of default at some point. This section helps you understand the options available to you to avoid defaulting.   

5. Making finances a priority

In this section you will understand the basics of making sound financial decisions when you are already burdened with student debt. It also offers tips on how to develop a financial plan that works for you.

Should you complete the Financial Awareness Counseling?

Although this is not mandatory, it is advisable to complete this counseling module. Some of the information within this module is the same as the information you will find in Entrance and Exit Counseling. However, Financial Awareness Counseling contains additional information that you won’t find in the other two sessions.

Managing and repaying your students loans can get overwhelming and you can find yourself facing default if you are not careful. Completing this module helps you understand what your options are so you can avoid some of the common pitfalls.

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